sensibly and creating jobs, not being punitive. i like the president's immigration lines in the announcement. i think he was right on the button, if he can hold to that, fix the border, get a path to citizenship and keep people that we educate. i'm telling you, in government trade, he mentioned that. let's do it. it take us four years to get panama and south korea done. it was on the bush table. it took four years to negotiate and we didn't get anything else new. those trade agreements would do all kinds of things for exports. >> are you at all nostalgic about -- ge out of nbc and comcast is running it well. >> comcast has done a great job. look, the market said good for both companies. the market said comcast got a great bunch of assets.

ge has more cash to do things with. time and men's fortunes change. you go with the flow. >> every time they do a deal, they say it's great for both parties. stock goes up in one case and down in the other. ge is in one, can use the money, comcast in another and actually worked. >> worked out well. comcast has a great set of assets now a ge has cash to invest in what they want to do. we all do it differently in our times. >> jack, we love you, on valentine's day especially. >> happy valentine's day. >> merger thursday with all these deals. huge day on wall street. almost $100 million in fees for the banks. center view bank. >> make sure you join us tomorrow. happy valentine's day. congratulations to "squawk." what a breaking news. warren buffett making a big deal

with heinz. i'm carl quintanilla from the stock exchange. kramer is off. we hope aol call in. heck of a week to take a vacation, one of the biggest months for m and a. year-to-date, m and a volume up 25%. berkshire hathaway, 3g buying heinz for $72.50 a share. $28 billion in debt. i know you've been working this, too. the notion now buffett is prorking with operational partners important -- portends a new area. >> one after a flurry of phone calls, the power of the brazilians. we keep saying this name 3g. people might be somewhat familiar when they think about abm or the buyout of burger king. really what 3g is is an

investment vehicle for three of the richest men in brazil, some of the richest men in the world, frankly. one of them in particular. jorge paolo. there it is. they tell us, jorge paulo on the board of gillette. he was the driving force behind this deal having approached warren buffett, not long ago. this happened very, very quickly. something we'll start reading about, perhaps second day leads. we'll bring it to you now, how incredibly wealthy brazilians are. these are bullet investments. in other words, not like a private equity fund where they raise a fund. this is their money. they put it in. $4.4 billion put in by them, $4.4 from berkshire hathaway, taking back a preferred $8 billion, which they will get 9% on. we'll get the details for you. that's the interesting point, carl. your point interesting as well.

they are buying this and they are doing to keep it. they are not going to take it public again. again, it's not a private equity model. they are going to keep it. the likelihood, this new partnership between berkshire and 3g, from what i hear, maybe they look for another company to buy. then you get synergies, not readily available right now through this purchase of heinz. >> another company to buy and combine in this space with heinz. therefore, the move higher we were seeing across the packaged foods area this morning. >> i don't want to get ahead of ourselves. this is something that will take years. my point, unlike again private equity, this is not. 3g is not, berkshire obviously is not. they are going to keep this thing and potentially have it forever, be a private company heinz. down the road, you could expect once they put a new management team in place and everything else, you will get other acquisitions. >> still, you can't ignore a bud, a burger king, now this. they seem to be making a few plays within a targeted space.

let's bring in becky, of course, spoke with buffett about the deal earlier this morning. what a morning. >> this has been a heck of a morning, guys. i've been listening to the conversation around the table. what we've been talking about is how this really is stepping up the amount of deal flow coming through. we had some statistics earlier today that with this deal between berkshire, 3g and heinz, this actually raises the united states m and a to over $182 billion for this year alone. if you put this on track to where we were last year at this time, it was only $58 billion. there is the sense m and a starting to free up and really starting to get moving. we did speak with warren buffett earlier this morning. the deal, you guys have been laying out the terms of the deal, 20% premium from the closing stock price yesterday. the way it's structured, buffett and berkshire will be getting half the equity in the deal. the other half, of course, going to 3g. buffett because they are putting up more money gets $8 billion of preferred stock. we spoke with them a little bit earlier this morning and here is

how he laid out the terms of the deal. listen to this. >> we're putting up more of the money but we'll be an equal equity partner with 3g. and there will be $8 billion of preferred stock and we'll eat a fraction billion of the common equity, we'll split the equity. but we're a financing partner in additi addition, and they are the operational guys. >> again, made it clear 3g are going to be the operational guys. he believes the ceo will be staying on. he's done a good job with things at this point. also talked about how 3g has done a great job with partnerships they have been involved in, pointed to burger king over the last several years and some of the costs they were willing and able to get out of the business and how they made that a much more profitable business. talk to a little about what he's been looking at. apparently this happened in early december. david faber talking about how this was a very new deal.

he said his friend jorge paulo came to him and started talking about this. they were on a plane ride together. that's when they first brought it up in early december. he's had a file on heinz back to 1 1980. this is one of the many companies he thinks about all the time. when the right opportunity came olong, that's when they were able to pounce and jump in. buffett said at the end of 2012, berkshire had about $47 billion in cash on hand. he says he always wants to keep $20 billion around. this deal is $12 to $13 billion he's putting in. that still leaves him with $15 billion and counting that he can still look for acquisitions. always talks about how he's on the hunt for the next big elephant. this one of those situations. the cash builds from month to month, so the gun is always getting reloaded. just because they are doing this big deal doesn't mean they aren't always looking for another deal to come along. when we were on the phone with buffett, we got a chance to talk about a few other issues including how he sees the economy right now.

while we hear from strategists, they think other international markets are the place to be, buffett thinks still the united states is the best place to invest money. listen to what he thinks is happening with the economy right now. >> it's really been remarkably similar since the late summer of 2009. it's slowly been improving. sometimes the sentiment gets stronger, sometimes weaker. the economy, if you look at our businesses, they have steadily gotten better but not at a fast clip. that continues right to this day. the carloadings of the burlington in january and somewhat in february. coal is down, oil is up. as everybody knows, housing is coming back with a fair amount of strength now from an extremely low base. the economy continues to improve but it doesn't do it as a rapid

clip. >> a couple of other issues we did speak about with mr. buffett this morning included moody's. berkshire owns more than 10% of moody's. obviously the stock has been hit hard because of the lawsuit against the s&p. he did say they have not changed their ownership or sold any of that stock in over a year. he said he has to see what the facts are with the s&p case but he said it must think that moody's would obviously be a secondary logical target if the government wins that case against s&p. and we also talk to him very briefly about a couple of other issues, brought up nyse, all the stories about his interest in the nyse. he said while someone at berkshire was contacted it was not him. he was not contacted person and he did not have any interest in the nyse on that part of it. he talked about this deal, 20% on the opening stock price, more than $72.50, because it was strayeding above that, heinz stock above that. he said no way, you're not getting another penny out of him.

guys, i'll send it back to you. >> considering the stock was hitting an all-time high, 20% premium on top of that is a rich multiple. >> when you get 20% of your all-time high, interesting here, bill johnson, the longtime ceo who fought off nelson peltz years ago. he became a board member. my reporting, seems clear they know the potential strategics out there, had conversations with many of them. it is seen as highly unlikely that somebody would come in here at this point and try to top this. you're talking about a deal done roughly 14 times, current ebitda, done in the same sector, 12.5, 13, a high price to your point, even though the premium itself not as high as some might say. wait a second, take out, it is the all-time high. johnson moved the company sharply into emerging markets which will comprise 30% of revenues. he's obviously gone from mega

brands. you know, he's done a good job in leading this company every since that challenge from peltz especially over the last year. not expected you'll see somebody come over the top here. one never knows but to the point of the stock trading above the price, that was a little strange. >> interesting to watch buffett buy something that wasn't at a discount relative to its most recent performance. >> he is getting 9% on his preferred. he always like that. manages to get a nice -- >> one man we wish were at the table but on vacation jim cramer. you know he never stops working. good morning to you. you're on the phone. i'd love to get your thoughts on the deal and the week. >> first, terrific deal for buffett. let's not forget this stock until coming into this year had done nothing in five years, increased its cash flow rather dramatically, even though earnings per share were up very, very big. this is another one of the

stocks that has done kind of like, around there gross profit $3.5 billion four or five, $3.2 then, $3.53. the stock up $3, $4 over a four- or five-year period. i don't think he's overpaying in the long-term. the first stop i ever bought for money for my hedge fund, i knew there would never be a chinese bottle of ketchup or japanese bottle of ketchup. this is one of the most iconic brands. he's done a great job what we thought was on board. however, in the last two years he's been kept back by the frozen food division. it's down. 15% of heinz total sales, talking about frozen potatoes. he tried to take a price increase, failed badly. it's one of those cases where the company may have been out of steam for now, but the brand never lost their luster. >> jim, in premarket trading,

we're watching a lot of the other consumer food companies trade higher as well. campbell's, kellogg's, general mills. is this because there's a thought these are now somehow perhaps takeover targets or the multiple accorded to heinz should now be applied to the other food companies as well so they should be trading higher. >> i think the big one goes for multiple analysis you're talking about. a lot of these others are tough buys. conagra did an acquisition early this week. kellogg -- campbell's, $10 billion forever. i think natural foods. general mills will acquire -- the group that used to be the subject of tremendous acquisitions, kraft, the quarter didn't look so good. i think those who buy these stocks expect another bid. isn't going to work.

that's why i think you're able to see them at something more than 10% more than they were a couple years ago. the gross millions were there. if you want iconic brands, always wants, buy immediately, which you can do, it does make sense. it doesn't make sense to buy general mills at 45, with a bid at 52. >> jim, i mean, you know, again, we watch that stock price trade above the $72.50, which i thought was a bit strange. these guys know all strategics that are out there. that said, the deal happened quickly, paulo approached buffet, they got together. they got a deal together very, very fast. at the same time they know the landscape pretty well at heinz. he's been talking about consolidation in this arena for a very long time. >> overbid buffett, that's not going to happen.

after what happened -- [ inaudible ] people get a little too excited. no one trumps warren buffett and lives to tell the tale. that's not something you do. if i were at morgan stanley i wouldn't pitch anybody on this, warren buffett, that's a loser's game. -- nice trade, find the next one. >> finally, jim, you know, we've put it all together, the comcast/ge deal, dell, new york stock exchange, amr usair, cardinal health, welch said it, money is not the issue. does this set the table for a bigger 2q rest of the year? >> you're right, carl. what's so great i'm going to bring a gigantic back to faber who did not believe me when i said it would be the year of the

deal. sounds like he's saying, jim, you better realize it's the year of the deal. >> i like when you put words in my mouth and then argue against them. i didn't necessarily say it wasn't the year of the deal. i just like to temper your enthusiasm. that's what i'm here for. >> this is payback temper for you calling him the smartest man in the universe. >> he hasn't gotten over this. >> historically, and david and i like to joke about it, the truth is size of the deals is big. the best way to play it is with the bonds dealers. david, how much is this deal goldman sachs versus the new m and a guy, goldman for 2013. >> it's an interesting point, although i will make another point which we'll start to hear more about. everybody advising the deal was boutique, centerview, quite a

run, moulson & company involved. you have very little participation from the big names, jim, in this deal on the advisory side. >> buffett -- you're right. buffett has got his own people. >> sure. >> historically he has terrific people on his team. i do think the m and a departments have, there's a lot of calls to make. i was with byron over super bowl weekend, warren buffett bankers, keep in mind dpolds guy. i do think phone calls to companies today saying, listen, everyone doing it, get involved, stocks are cheap. >> jim, we expect to see you tanned, rested and ready next week. >> you're actually going to see me like this. this is the warmest and best vacation in a excluded area. how about that. >> jim, enjoy. thanks for coming to the phone. we'll see you soon. >> thank you guys. talk to you soon.

>> cramer talking berkshire deal. road map including stories we're watching. this other deal, $11 billion one between amr and us airways to create the largest airline. nine out of ten domestic flights will be on one of four areas. is that sector's consolidation over. >> global markets a lift from gma, disappointing from japan to germany to france. is the rest of the world teetering on recession. >> european losses get a little worse. company expects breakeen results by 2015. a lot more "squawk on the street" is after the break. to c. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later?

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skies to create the largest airline. american airlines parent amr are merging in a transaction $11 million. phil lebeau. >> wrapping up a conference call going over the particulars of this merger. here are the numbers to take a look at. an $11 billion all stock deal. here is the way it breaks down. 72% by amr creditors, the others by usair shareholders. when you take a look at the combined airline, you have the number three and number five before the merger coming together. they are now the largest in the world. you look by seat miles they are larger than united, delta and further down you see southwest and jetblue.

here is ceo of the new american airlines doug parker talking about why this is a good deal for consumers. >> between our two airlines, 900 routes, only overlap on 12, most are hub to hub like charlotte to dallas, voefr. very little overlap, highly complimentary. we expect to continue to fly, continue service out of all the hubs we have, service to the communities we have. that's good. >> take a look at shares of us airways over the last years, up more than 60%, moving higher today. what's interesting, carl, a number of analysts put out notes as soon as this merger was officially announced and they are all complimentary saying, yeah, the consolidation game appears to be over but discipline has people confident on wall street that earnings growth will continue for the airlines. we'll see. this is an industry that doesn't have a lot of good track record

when it comes to maintaining that discipline prof parker tried to suggest on some morning shows fares won't rise as a result of this deal. i wonder if you believe that whatsoever? >> you know, if you look at the studies going over consolidations in the industry, generally speaking you do not see a huge increase post consolidation after two airlines get together. really that's a reflection of the fact you have more low cost carriers in more markets around the country. southwest is a big driver of that. that's really the ultimate penetrator in terms of keeping those fares low. >> great story, phil. appreciate that. phil lebeau joining us on amr. when we come back, will the markets feel love on valentine's day. we'll talk to art cashin as we count down to the opening bell. gdp numbers around the world, not too good, which is one reason we've been able to dig out of the red despite a flurry

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five minutes until the opening bell rings on valentine's day on wall street. bring in floor operations director, art, certainly we have a lot of deals going on. the biggest month for u.s. deals since june 2008. it's the gdps around the world putting a wrempbl into futures this morning. >> particularly in europe,

shares of gdp reports knocked europe for a tailspin here. not too much valentine's day cheer showing up. so far beginning to look like the dow has given up rallying for lent. let's hope that doesn't continue. >> lent is a long time so let's hope not. in terms of the g-20, it's sort of a photo-op and that's it. is it much more important this time around as there's so many statements regarding currency manipulation being bandied about, having an impact on currency market and equity markets. >> you're absolutely correct. it went from g 7 comments to possibly right on the main table. g-20 meeting. the thrust is the end. how do we keep this orderly and prevent an outright currency war from breaking out. we've got a lot of american message fund players going

along. half the world appears to be short the end believing this is going on. >> a longtime strategy to a certain extent, worries about the interest rate, starting to pay off. >> thanks, art. opening bell is next with banana joe. don't go away. through presidents' day, get 36 months interest-free financing and save up to $500 on beautyrest and posturepedic. get a sealy queen set for just $399. even get 3 years interest-free financing on tempur-pedic. plus, free delivery, set-up, and removal of your old set. keep more presidents in your wallet. this special financing offer ends presidents' day at sleep train. superior service, best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪

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are. about to ring the bell, wondering if it's big enough to call. he's being very good here. at the big board this morning if you don't know the name already, shame on you. banana joe celebrating best in show at the 137th westminster kennel club dog show. congratulations to him. we're going to talk to the owner. over at the nasdaq, scholastic corporation, publisher and distributor of children's books celebrating again. what's with the dogs. clifford, the beg red-dog's 50th

birthday. i wouldn't want to see clifford and banana joe in a fight. >> i think banana joe -- we've talked to past winners, best in show dogs. it's amazing how still they are despite what's going on around them, chaos, dogs. >> like the lion king on the mountain top. a big stripe across the forehead. what an odoorable pooch. it is valentine's day, too. according to howard since 1958, s&p been up way below the average, 52% of the time you're up, less than 40 for valentine's day. >> not a day of love with stocks in general. let's take a check on shares of blackberry. edry, s.e.c. filing co-founder

has now a zero percent stake in the company. not clear what it was before, as of december 31st, he has no financial interest in the company. that stock trading lower in the day's session. interesting hearing that, co-ed founder not having anything to do with the company founded. >> a story we haven't mentioned at all, an important one, also involves brazilians, anheuser busch brands, complete divestiture modelo, two constellation, will not just distribute but have rights in perpetuity, manufacture, buying the big brewery. all of this designed to allow for the dodge to stay, okay, guys, you now get the green light. that is anheuser busch to buy

modela. hasn't happened. we're going to be speaking to constellation brands ceo 11:00 eastern, rob sands. to explain what's going on here. you may recall constellation brands stock fell dramatically when doj came out to block the deal. they had a great deal with what they didn't own in crown, distribution rights for mexican beers here in the u.s. it was perceived that deal was not going to happen if the deal overall was going to be blocked. but now we may very well see that deal happen. take a look at anheuser bush. >> this is biggest by far, s&p. >> even above what heinz is doing. heinz and constell aig, two big s&p gainers. >> interestingly both involved the brazilians. heinz being bought by the brazilians, that is 3g.

don't forget 3g, the money behind it, driving force behind what was the acquisition of anheuser busch. they are involved in a lot of deals today. >> they are. hands in a lot of honey pots. cardinal is another we're watching in terms of rounding out action. shares at 52 a&e week highs, $52 billion closely held medical supplier company, interesting to see the stock making a purchase but yet rising in today's session. >> from carnival -- cardinal to carnival, that ship towed in the gulf of mexico expected in port, sometime after the middle of the day. stocks down again as they are giving credits and a cash reward, reimbursing the purchases you made on the boat but not in the casinos. >> that is the least they can do with these poor people trapped

in a loet with limited toilets. outlined financial impacts that's priced into the stock as well. >> makes you wonder, given everything lost in market cap, why not flood the zone in terms of trying to compensate the passengers beyond $500. >> everything. >> i think concordia, we had this discussion last night. concordia was across the globe. this is americans on a boat offshore. >> only supposed to be a four-day trip, i believe. it's not a long cruise. >> sounds like gilligan's island. >> it does. even worse. after all, there's no mary ann. >> or ginger. >> tina louise, i'm sorry. >> i was thinking ginger but i went mary ann. it's been a long time. i vice president watched in a long time. not that mary ann was bad. >> girl next door. >> lawsuits and litigation. >> bookings. >> it may not end here in terms of impact on first quarter results. whole friends down 9% out with earnings yesterday after the

bell. the problem, a high multiple stock, of course, they lowered sales guidance, also lowered same-store sales guidance. they don't expect improvements in gross margin. they expect future quarters escrow to be slower. wells fargo came out what note saying this is a buying opportunity. they say this one off in terms of the sales slow is because of the higher payroll taxes that are hitting as opposed to a secular decline in demand for organic and higher priced groceries. the question here is whole foods sacrificing margin to compete with lower price supermarkets as the consumer appears to be more and more strapped. that's sort of the ongoing question here especially as whole foods trades again at a 33 current multiple here, down 9%. >> blackberry down 5%, a filing now confirming that the former co-chief executive has sold all his remaining shares. at one point 5% stake as late as 2011 but is out completely.

the other co-ceo does remain on the board. he was at a launch. that's adding pressure to a name that had seen a bit of a rebound. same thing with groupon. another positive note from evercore, $5 better than some of the other prices we've seen. >> exactly. we're watching shares of herbalife and jcpenney, bill ackman from the conference. most of the address spent on herbalife, the understatement of the year is that he's a little bit obsessed with herbalife. the stock is trading higher. jcpenney in the after hours section really spiked after bill ackman took on the role of salesman in chief, touting the turnaround taking place, the store turnaround is amazing,

price comparison ads comparing prices of jcpenney goods versus similar quality goods at other stores and that's working. giving out those in the after hours. >> continuing to wonder when it comes to him finding this fascinating this battle he's involved in in herbalife, how his investors are acting when they see him engaged with carl icahn, so obsessed with herbalife, whether they are saying, you know, i can find my activist exposure somewhere else. i'm going to pull my assets. interesting part of the story. certainly keep an eye on it. >> he did say that interview has put him in touch with people from around the world, friends from 4th grade getting in contact with him once again. >> financial world. >> guys used to beat him up on the playground and he would cry. >> ha ha. >> i can't help it. >> all right. let's check with bob pisani who is back from florida, etf conference. he's with me this morning. hi, bob. >> 89 for five days. that's all i've got to say.

it's been a fabulous winter. everybody is saying in their it's been one of the best winters. we just saw the winner of the westminster show, figueireaft a. forget the cater. -- indicator. u.s. stocks covered. we got a little better than expected jobless claims for the week. that helped our market. looked like this, a little bit of a bull in futures overnight. germany and france both seen a contraction in q4. art talked about the g-20. japanese came under heavy criticism. that's ongoing that meeting. they are saying they are not trying to weaken the yen, simply trying to strengthen their own economy. the bottom line, both go hand in hand, weaken the end to make it more competitive.

alr deal. you mentioned that. now that the consolidation is basically over and it is, we've got three big companies in the u.s. we've got delta, usair, amr, and we've got united continental. next question is what happens? so the good news is pretty simple. the profitability has been improving, capacity down. they have been paying down debt, all of them. here is the problem i see. exact problem with home builders. that's it. the prices have gone up. the airline index, xal at a five-year high. how much room is there? everybody keeps talking about raising fares. phil mentioned this earlier. i don't know how many. there must have been 12, 14 price hikes announced last year. i don't know if half went into effect. price hikes announced, most don't come in effect. i'm not sure how many this year. cab ella's outdoor sporting goose company, excellent report. buried in the report, interesting comment from the

ceo, comparable store sells by a surge in firearms and ammunition increased 12%. that is a new record for our company. isn't that interesting? sales did increase in the wake of what happened in newtown as well as concerns president obama would try to restrict gun sales. more on that on my blog tradertalk.cnbc.com. >> bob, welcome home. good to see you back. rick santelli in chicago. good morning, rick. >> good morning, carl. we've all heard the news, there's a lot of gdp shrinkage in japan and third quarter, eurozone. it's very difficult to tell sometimes. look at a 24-hour chart of our ten-year, think what the multinational companies are thinking, looks like rates going you up, auctioned off ten-years, 24 billion. there's a rogue, a new guy on the block. it distorts it a bit. you can see we're coming back down. these yields on this new guy, still a good chance we'll settle above 201.5 close, going back to

early april. if you look at a two-day chart of the boone, you can see dynamics in place, about face, suggestion of data, weaker data showed up in the marketplace. look at spain, this is really interesting. a two-week chart of spain basically, wow, these yields are really going down. are even the southern countries have their funding issue fixed now becoming flights of safety, what is slower economic growth. you have to answer that question. one area that is making sense, look at a two-day chart of the euro currency and how it's reversed. think back yesterday, 134.50 is a pivot. if you use that as a pivot you're smiling. big down day in the euro. if you open the chart up a bit, you can clearly see on this two-week chart at the euro any colostomy. friday weekly closes are highly significant for technicians. well, it could mean that the euro, unlike some of the flight to safeties in southern europe is going to give you an after

picture of horsepower in the eurozone markets. melissa lee, back to you. >> rick santelli, thank you. coming up general motors chairman bob lutz waist in, looking beyond the government motors era. mobile, alabama, the destination of the disabled carnival cruise ship towed through the gulf. >> triumph several areas away expected to arrive sometime in the afternoon, hours long process. details wen we come back. (music throughout)

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the cruise ship left adrift in the gulf after an engine fire. towed to mobile, alabama due to arrive there sometime day. janet shamlian in mobile with the latest.

i have a feeling this is not going to be like that scene where people come off the boat. >> not the scene you see after a caribbean cruise. we're expected the hobbled cruise. it's a long process to get them off. the cruise ship terminal has not been used in more than a year. they have been rushing to get that ready. bringing in port-a-potties." i heard you talking earlier about the $500 additional compensation offered to passengers yesterday by carnival in addition to what passengers are getting earlier. it's a very interesting concept. you've got to imagine the. >>'s attorneys are circling around here. we're talking to family members gathering here. one gentleman said, look, my wife is a nurse.

she was supposed to be back to work tuesday. they will have missed fewer days of work by the time this is over. $500 will not cover what she's supposed to make. if she doesn't work, she doesn't get paid. this is not the end when people leave here. we're expecting financial hardship. this is a blue-collar cruise. not a high-he said cruise. people are going to have some loss of revenue. what's going on in the next few hours, they are getting up to speed here. carnival trying to get people home as quickly as possible. putting them up and then flying them to houston. that's not the end of it. most left cars in galveston, texas, which is where they left from. they will have to go to galveston, get their vehicles and go home. many won't reach their home until the end of the day on friday. that is a lot later than monday morning when they were expecting to be off of this ship. carl. >> janet, it will be quite a

scene. hope to come back to you later. janet shamlian in mobile. i guess they have a choice of staying at a hotel overnight and then leaving the following day, which you think you just want to get home. >> you want to get home. but you also probably want to shower. so a hotel may not be so bad in terms of delaying on the return. >> i don't want to delay on it too long. some of the reports we've had are just -- >> tough, feel for those people who thought they were going on vacation. >> the good news is there have been no fatalities, injuries, everybody hopefully will recover. >> see what happens to ccl. when we come back, california-based apple hoping for much needed love. will it come in the form of an apple tv event. one is going to happen next month. we'll tell you what he's expecting when we return. ♪ ♪

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been a busy hour so far. simon here to tell us what's coming up at 10:00. >> the next hour of the program we're going to explain to you why airfares could rise for you

as a result of the big airline deal today. rival virgin america ceo will join us live. also talk about general motors. if it sorts out its programs in europe, how much more money by stock, vice chairman and zillo up 18% in wake of its earnings, the ceo will join us live. another here of cnbc. back to you. >> looking forward to it. rumors that app will hold a tv event in march according to peter misek. he joins us from the trading floor. >> thanks for having me. >> a march announcement of the tv product but a rollout not until later this year. >> we think it's an sdk for the setup box. we don't expect a tv announcement. in fact, from the loop basically came out and said no tv. we think it's an sdk. there will be some other kind of product event. we don't know what it is. we're pretty sure it's not an iphone or ipad. >> in your notes, peter, you

took down estimates in terms of iphone 5 production. it's basically because you anticipate another one, refresh to happen. how will this impact margins. seems like the faster they move away from the iphone 5, the less margin they can save, in other words. the gains they can make in terms of keeping the product in production longer will dissipate. >> yeah. so what we're hearing is apple is starting to lose more market share at the high end to samsung, particularly in europe. that's because they don't have a big enough phone size. the screen deemed to be too small. tim and apple argue that's by design. they feel they have the right, appropriate size. we think they are losing market share. that shift is causing market pressure and margin pressure. we also believe it's causing suppliers to continue to cut production. we do see an iphone 5s and lower cost phone in june.

some cuts could be related to that. >> sounds like all in all margins will come down for apple when it comes to the iphone product line we're factoring in iphone 5s, lower margin phone and iphone 6 moved up, all of that equals margin pressure. >> correct. we are significantly below the rest of the street for the june quarter in particular. we're around 150 basis points lower on gross margins. that means earnings are going to be lower. if we look out, we think there's somewhere between 2 and 300 basis points of additional margin pressure which probably means gross margins hit 35%. we don't think the street is ready for that. >> what's this tv event? what do you think this is all about? >> we think that there is a huge developer opportunity in the living room utilizing apple tv, existing set top box. that may or not be an advance of an actual television. obviously chasing the tv for a while, a bit of a unicorn. we think developers clamoring

for an opportunity to get access to that, far beyond the ability you now have. >> not necessarily a rollout of the product in march, something more to attract developers? >> correct. an sdk to write apps specifically for a device. currently apple tv set top box doesn't allow developers to natively make games such as angry birds or something like that. >> peter, i want to ask you about a development we learned about, leon cooperman of omega liquidating his shares. i know you don't cover facebook but i'm sure this is a conversation with institutional investors wondering if they should hole onto apple or put into a higher gross story. institutional investors whether apple has transitioned to a value play as opposed to a

growth play. >> we've spoken to a few hundred investors globally. this is realtime, something happening now. investors have money in apple. obviously it's starting to concern them. they feel it's more range bound. they look at the alternatives and they are really limited in terms of something that's big, that can grow. facebook is one of the alternatives that people are considering. google being another, emc being another. those will be the ones we're hearing most often as considerations. our view, we think $500 is the ceiling for this range that apple is trading in, until they can stabilize or show us that margins are bottomed and potentially starting to expand again. >> peter, thank you. >> when we come back, more on the two big deals of the day, buffett's berkshire betting on heinz. we'll get a berkshire shareholder's take on what's called the biggest food deal ever. american and us airways combining to become the largest

airline. hear what ceo of virgin america has to say about the merger in the sky and what's at stake for his airline in the cnbc exclusive. remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.

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welcome back to a news packed "squawk on the street." road map for the next hour, m and a hitting the street, berkshire and 3g buying heinz for $20 million including debt. we'll ask a long time berkshire shareholder how he feels about the deal. >> comments on the merger in the skies between us airways and american airlines. it is a cnbc exclusive. >> ceo of zillow joins us, shares surging 20% after record fourth quarter earnings. his initial reaction live in just a few moments. first back to the huge news of the day. warren buffett's berkshire hathaway and 3g buying heinz. bring in the man who broke the story. andrew sorkin. thanks. walk us through the history of this deal. >> this deal -- thank you, carl. the deal came about starting in december when actually the folks at 3g reached out to warren

buffett. we do have warren buffett describing the transaction. it is for $72.50. the premium, 20%. should note 20% off its highs. that is something not though sneeze at. take a listen to what warren buffett had to say about the transaction. >> we're putting up more of the money but going to be an equal equity partner with 3g. there will be 8 billion preferred stock and then we'll each have four and a fraction billion in equity. we'll split the equity. but we're a financing partner in addition and there are the operational guys. >> let's take a look at heinz stock right now. one of the things that's important to understand about the way it's trading this morning, heinz still has a dividend. you're going to see it there. it's trading right around the price of the transaction itself.

some people thinking perhaps there's going to be a push for them to pay more. that's not really what's happening, more of a function of the fact of the price of the transaction, plus dividends that will be paid before the transaction closes. let's also take a look at some other food stocks. kraft is up on this news as is conagra. you can see the whole list there of what's going on. one note, hershey, a lot of people wondered what other types of companies warren buffett might buy. hershey has always been on the lift, not a suggestion he's buying that but worth noting. also talked to nelson peltz, the activist investor who took a seat on the board of kraft, not kraft but heinz back in 2006. this is what he had to say about the deal making environment. >> i think there are many more deals coming. i'll say it again.

that's why we made our investment last year. we think m and a is back, revenue market is hard to come by. i think most of corporate america feel they have skinnied down their operations to a point where they can't get much more out of it. so synergies are the next wave of eps growth. >> on this valentine's day he seems to be correct worth noting $182 billion of transactions so far this year. that compares to last year only $58 billion. also by the way, a big payday for the bankers on wall street. there could be fees of $100 million involved in this transaction. the big winners, centerview, moells, berkshire, lazard, jpmorgan, wells fargo. that's it on this valentine's day. not just this deal, so many others, the airlines, comcast,

our parent with nbc. so it's -- we might have more. we'll see what happens next monday. >> your great discussion with buffett this morning, andrew. he did lay out the notion there is more money to play with this year. it's likely to be a u.s. enforcement. is it worth spending time guessing who would be next? >> every time i'm wrong. >> just go for it, andrew. go ahead. >> i'm going to be wrong. but i will say this. on heinz itself, one of the questions we did ask was whether he could see heinz used as a vehicle for other food companies. he didn't shy away, didn't say it was doing to happen tomorrow. this was not his last deal with heinz. i think you're going to see headlines in the future once this deal is closed where heinz is buying other food companies. we should watch for that. >> andrew, great work as always. >> thanks. >> andrew sorkin. >> let's get insight from longtime berkshire hathaway. bob miles, the author of the warren buffett, ceo.

bob, i'm going to pick up our conversation right where we left in with andrew ross sorkin, what do you think the strategy is of mr. buffett is buying heinz? will heinz be used as a rollup vehicle to acquire other food companies in your view? >> well, first of all, happy valentine's day. i'm a little bit surprised on valentine's day that warren didn't buy a flower company since he already owns a chocolate company and jewelry store chain. but i think heinz is no surprise. he likes family operations, 140 years in old industry companies like underwear and dairy queen. so it's no surprise. >> but in terms of the lo longer-term strategy because we're always thinking what is next, seeing food companies on this notion they might be takeover targets down the line. do you think this is part of a longer-term strategy of mr. buffett's to roll up other food

companies? >> i think if he finds value, he'd be very interested in private companies, food companies like mars and wrigley, which were actually pitched to him by my students at the university of nebraska atom has when we pitched potential acquisition candidates to him. he's very interested in long-term well established global brands with a competitive advantage like heinz. it's the perfect acquisition for him. >> how do you extract from this? what can buffett do with heinz that is worth him paying this premium and more? >> i think the same questions were asked of him when he bought burlington northern. i mean, he is consistently approving the critics wrong over time. initially they thought he overpaid for see's chocolate, he paid well over book, five times

book. charlie used the example of coca-cola where you pay up for the quality, you pay up for brand name. and i believe had warren had $16 billion in 1988, he would have bought all of coca-cola. but he only had a billion, 25% of his holdings at the time, so he was only able to buy 6% of coke. >> i'm assuming as brazilians are in on the deal it's about taking these brands to latin america? >> well, it's the global growth strategy. obviously we're food and global brands are a sweet spot for berkshire hathaway. warren would love for see's chocolate to travel but it doesn't travel well because they don't put preservatives in it. they redistribute themselves to california near their manufacturing plants and they have outlets near airports where

they can supply the food product within three or four weeks of consumption. >> bob, thanks for joining us. appreciate your time. bob miles, cheryl at berkshire hathaway. >> after the break this morning, a deal just in time for valentine's day. a merger in the skies. amr and usair confirming they will merge creating the largest airline in the world. all the details on that deal and what means for the rest of the industry after the break. immediate reaction to the big deal from the president and ceo from virgin america. that is a cnbc exclusive. back in a couple minutes. [ male announcer] surprise -- you're having triplets.

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back to the deal of the day, just in time for valentine's day, a corporate marriage, boards of amr and us airways approved a merger, the deal creates the largest airline on the planet, valued at $11 billion. phil lebeau joins us with more. hey, phil. >> carl, you made a great point last hour when he said look at all the large airlines in the u.s., nine out of ten will be by the top four carriers, the biggest of those will be the new american. this the merger of american and us airways. look at the hubs they are going to have here when you combine the five from american. we're talking about dallas, los angeles, chicago, new york, miami, along with us airways and

their hubs in phoenix as well as in philadelphia, charlotte, strong presence in washington. this is going to be a huge airline. it will be run by doug parker, the ceo of us airways. he will be the ceo of the new merged american airlines. what about tom horton, ceo of american becomes the chairman through the middle of 2014. here is why these two gentlemen believe this deal makes sense. first of all, american airlines expects $1 billion in synergies by 2015. they are going to be stripping out costs they say are duplicative between the two airlines and they believe they can get those synergies up to a billion dollars. they are going to have more than 3200 daily flights, the bulk of those here in the united states but still a strong presence to latin america and europe. as tom pointed out on "squawk box," they have labor peace going into the deal. >> it does have broad labor support. in fact, we do have the labor agreements in place up front.

so we have certainty on the costs of the integration. that's very unique in an airline merger. >> so the question now for investors, has the consolidation play made out when it comes to the airlines. there's no doubt the airline index has been the place to put your money over the last six months, carl. a lot of people are now saying what happens now. this the last of the major consolidation plays that was out there. so if you're an investor, do you look at the airlines and say, hey, i think they can reap the rewards now or do you look at it and say the gains have already been locked in. time to take that money out. carl. >> let me pick it up, if i may. meantime, this is a personal triumph for doug parker. he wanted the deal, got the deal, a deal horton didn't want. in the process has he givenaway too much value that by rights should belong to us airways. in bringing the amr committee and going behind horton's back toss a deal with the labor

unions, is he giving away too much? >> some will say yes. additionally the offer was 49% stake going to us airways. they are ultimately ending up, their shareholders ending up with 28% stake. i think everybody realized if this was doing to be done, he was going to have to pay up in order to make it happen. you talk pout how he has been pursuing this deal, simon. think about this, eight years ago doug parker was running america west. he desperately wanted to merge into a larger airline, swung the us airways deal. he was turned away a few years ago when he tried to make the united deal. he was finally successful making this deal, turning us airways into the new american. he now would be running the largest airline in the world. >> see how they react. thank you for more on this huge airline merger bring in president and ceo of virgin america. he joins us in an exclusive interview from san francisco. welcome to the program, david. nice to see you again. >> good to see you, simon. >> cut to the chase, do ticket

prices rise, not just four airlines with 80% of the market. more importantly, in certain of the hubs, you now have extreme concentration with this merged airline. what happens there? they have a near monopoly. you may be able to fly anywhere but at what cost? >> i think there won't be increased ticket prices per se. as long as there's competition, there will be good value on ticket prices. the real question in my mind, what happens to access to the key airports. that's always been the issue, if you can't get into key airports there is no competition. certainly the concentration at the big hubs will have an impact on ticket prices. the real question in my mind is are the smaller airlines going to have access into the smaller airports. >> small airlines. am i reading between the lines you are positioning for regulators to sell slots at laguardia or reagan? >> absolutely. when i look at the united continental merger, the great

example i use is service into newark. we've been trying to get to newark five years. we finally have been successful. what we've seen is ticket prices for tickets into april are down by 30 to 40%. that's a key thing regulators need to look at, make sure small carriers like virgin america, jetblue and others can get access to airports. >> a lot of the travel industry is closed. all you guys, doug parker, yourself -- tom and yourself, sorry, all three of you went through american airlines. you were involved in the 1980s in the finance department. do you think culturally us airways, management team can walk into texas, enter american, make the changes they need to. culturally will it work? >> i think it definitely will work. i know the guys at us airways and the guys at american. they have the common focus, which is to build a strong company, put good service out there, make sure their employees have a stable place to work and ultimately to come to a good return nor their shareholders.

i think a lot of the poker that's been going on between doug and tom has been about making sure their shareholders get a good deal. i think this will work out just fine. >> a lot of the headlines internationally willish now that american is in charge of the deals, used to be europeans ran big international alliances, now clearly americans have the upper hand. but behind that, what is the role of willie walsh of british airways. he has us airways feeding his very lucrative transatlantic operation. did willie welch play a major deal in your view of getting this done? >> i think willie was in favor of the deal. i don't think he got involved in the politics and drama in terms of negotiating it. certainly a good deal for willie, british airways. i think you made an important point. the center of gravity in the global industry has shifted back to the united states after really being european based for the last 10 years. that's where it should be.

we're the largest market so far and the center should be in the u.s. >> in the meantime phil lebeau, question whether consolidation play is over. given capacity discipline there obviously is, how much more do you think investors can make from this space? >> i think we're just starting right now. if you look at the price earnings of the airlines, it's generally around six to seven, which is a historic low for the industry, certainly a huge discount to s&p. i think there's a lot more room. i think we're just starting on what should be a big upswing for airline stocks. >> david, we have this discussion with hotels all the time, too. looks like they have discipline on capacity for a while. we start to see in hotel's case room rates go up, fares go up in this case. eventually someone spoils the party. i just wonder who will make that first strike to try to get marginal business and once again make the industry as troubling as it always has been to make money. >> you know, every time we have

one of these mergers, the key thing we look at as a positive is one less scheduling department and one less pricing department out there. you're going to see natural discipline because there are fewer guys out there that can screw it up. >> that is true. and you mentioned the hub structure early on. i'm thinking of all the cities that have essentially become one-horse towns, phillies, miamis, what is the most competitive hub or market now. >> certainly i think one that bears watching is chicago, o'hare is the only two-hub airport in the world really. of course down the road you've got southwest and midway. that's going to be an interesting one to watch to see how the new american goes in and reacts with their new strength in chicago. the rest of them, as you said, are generally one-horse towns outside of l.a. and new york. >> does richard branson ever talk about selling you, david? >> not to me. >> we haven't heard about it,

either. nice to see you. thank you for joining us. david cush, ceo. >> did you see the sigh of relief. over here in the retail space. let's get back to josh lipton for a market flash. hey, josh. >> reporter: hey, melissa, barnes and nobles deep in the red. it expects nook unit to record a loss in 2013, slower sales of ereaders, looking for an ebitda loss to exceed the $2 million loss recorded in 2012 with barnes an nobld nobles. down 6% now. back to you. >> zillow recording fourth quarter numbers that hit the street. can they keep up with growing competition. can zillow be the best way for housing overall. joining us live in a moment.

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general motors misses estimates, comes in above expectation, what's the future from here. joining us on the phone bob butz vice chairman and cnbc contributor. good morning to you. >> good morning. how are you guys? >> pretty good. trying to make sense of the quarter. a little complex, everybody pointing to europe. not betting on a pick up in europe, maintaining target for break even by the middle of the decade. are they running in place or are these macroforces too much. >> the whole european business, it's bad for everybody. nobody doing good, they are struggling with ford in their home markets. it's going to take a while to turn around. i think the european economy may be on the cusp of returning. the key thing to focus on, i look at year over year. yeah, profitability is down but

mostly due to special items. if you look at the fourth quarter that's kind of more of an indication of the momentum the company has got. fourth quarter profit almost doubled and fourth quarter revenue up quite sharply. so i think the company is well positioned. and the fact that revenue is up slightly, global revenue up slightly by 1%, despite the fact revenue in europe is way, way down, it indicates that the business in the united states, latin america and especially china is very, very strong. so overall i think the earnings report presents a picture of a very healthy couple. >> bob, i'm curious, how seriously do you think investors should take this prediction that europe will return to break even by mid decade given all that is going on in europe. can the company accurately make such a forecast or can we expect when the time comes again the losses will be ratcheted higher? >> well, look, the recession

there, a lot of indications that the recession in europe has about bottomed out. i know some of the big investment banks are starting to buy up european securities because they expect the turning point to come fairly soon. gm is not waiting for that, like other companies they are taking measures to address that by reducing capacity. i think by mid decade, heck, that's two to two and a half years from now, we should see solid progress. not only for gm. again, europe is not a gm problem. europe is an industry problem. i think at this point a forecast of break even by the middle of the decade is as good as any other forecast. >> in the meantime, it's billions of losses. it's 700 million losses in just the last quarter. does there a point come at which you say, seen it in banking with

people shutting down franchises in asia, parts of europe. does the global brand have to remain a global brand or do you say to hell with it. maybe we'll make gm cars in europe for the foreseeable future. it's just not worth it. >> well, i think i can't speak for the company because i'm no longer a part of active management, but i think the company is a longways away from that. as long as china, u.s., latin america, asian markets, india, so forth, as long as they are going strong and lawsuits in europe are bearable, i think for another two or three years they will stay the course. it can be turned around and will be turned around. i would say getting out of europe would be the last resort. remember at the time of foreclosure the initial plan was to sell off european operation, the new board rejected that plan. in fact, i think that was one of

the reasons that fritz henderson was removed as chairman because he advocated the sale of european operations. i would say short-term that decision has cost the company easily a couple million dollars. the european operations are not only a failed opportunity but also an important product development center. the operation creates a lot of the architectures successful around the world. you wouldn't save all the money because you would really lose all of that engineering and design competence in germany which benefits the whole company. >> bob, before you go, you say europe being on the cusp of turning. a lot of people disagree with that given what gdp looks like, what currency are doing to their

exports. >> no, look. i'm fairly close to goldman sachs. those are very smart people. they have done extremely well with it, buying european security. they are probably doing value buying. they are very smart people. they probably see that there's light at the end of the tunnel. i'm convinced there is because even though europe in the seller right now due to misguided economic policies, parenthetically, many we see adopted in the united states, which is a worry, but ultimately europe will straighten out and go back up. >> bob, appreciate it very much. good to talk to you again. >> good to talk to you. >> bob lutz. >> go straight to jackie

deangelis nymex inventory numbers. >> hey, melissa, the number came out from the energy department. inventories down 157 billion cubic feet. that is a little bit more bearish than expected. the expectations for a number of 162. traders telling me to put that in perspective. looked at the number this week last year, 113. of course we had a mild winter last year. the average for the last five years is around 154. so we're in those seasonal ranges. with winter storm nemo, there's so talk we would see more of a draw because there was more heating supply necessary because of the storm but not necessarily looking like that was the case. right now checking out this number in terms of the price action, we did see a steep drop on this number coming out. as i said, it was bearish, the price of nat gas continuing to go lower. back to you. >> jackie deangelis will coming up next, the carnival "triumph" making landfall in alabama.

live from the gulf coast right after this. plus much more how the megamerger between usair and american airlines could reshape the business in the sky. back in 2:00. at farmers, we make you smarter about insurance.

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hathaway and 3g buying heinz. one of the big winners of the deal, the new secretary of state, john kerry. john harwood with more. >> nice payday for secretary of state, john kerry. according to financial disclosure forms personally owns $500,000 in stock. his wife teresa heinz kerry who had been married to john heinz of the heinz fortune inherit add whole lot of heinz stock. much of it was for her children. on financial disclosure forms secretary of state indicated within 90 days she was going to differencest herself of a lot of the heinz holdings not the

marital trust she established. we don't know exactly what it means for teresa heinz and larger heinz -- or heinz kerry family. but john kerry himself got a nice little bonus today. >> thanks, john. >> we've got a lot of deals going on today, one we haven't mentioned too often involving constellation brands anheuser busch, enbev, potential remedy to doj problems anheuser busch had to acquire 50% of a group they didn't own. let's get to that and i want to bring up dell as well. we've had interesting developments there also. as for the deal, it's having a positive impact on constellation brands stock price. that's the dell deal. constellation brands stock price. they will buy 50% as a result of this deal. they will buying breweries, including the main one we're talking about here near the

state of texas, essentially not only having the right to distribute those beers but will own them as well. many who follow trust doctrine closely this will satisfy doj. we'll see. nothing says it will with great certainty. this divestiture previously planned with crown who distributes beers and makes market and pricing decisions but in addition $2.9 billion constellation will pay to buy piedras negras brewery will allow constellation to get on with it's important deal and an hufr busch to acquire grupo modelo. want to get to dell, interesting filing from that company's special committee board of

directors. you know there's been a debate lately that has risen over the price. and we've had t. rowe price, and most importantly southeastern asset management, large shareholders of dell, 1365 not enough. well, special committee puts a filing out, essentially q&a. we'll get more when the proxy comes out here. let me give you the takeaways, they are important. they began their process in august. they had over 25 formal meetings in addition to participating in six board meetings including only independent members of dell's board. three differ sponsors permitted to conduct due diligence and make proposals. so clearly they looked and didn't bite. michael dell said that he would not commit to any of those sponsors at any time during that process but would work with whoever might emerge as high bidder. perhaps most importantly to get silver lake to get up to 1365, dell rolling in his shares of

the deal at $13.36, in other words, a smaller amount. they will get a larger portion of the equity, if you will, as a result of that decision by him. that was enough to get him to go up to 1365. important things that point to how hard it was to get to 1365 a share perhaps giving pause to those who would say we think we can get a higher price. >> thanks, david. carnival's "triumph" cruise ship expected to dock in mobile, alabama between 8:00 and 11:00 p.m. eastern tonight after losing power on sunday. let's bring in somebody who had insight on what those passengers might have gone through the past few days at sea with no power. a former information officer for the cruise line and lived on "triumph" for months. you have an insight. what's your guess of what the conditions will be. give us a sense of the common areas, how big the ship is, whether or not people, especially those with interior cabins who don't have the

benefit of opening a window what they might be doing and if there's enough space for those people to go circulate elsewhere. >> sure, yeah. i mean, i lived on the "triumph" when we went into dry dock, so i know what it feels like when the ventilation systems go out. i talked about this in my book, "the truth about cruise ships." it only takes an hour or two without ventilation before it becomes too hot inside. you add to that the plumbing problems we're hearing about. i imagine passengers are spending as much time as possible on the open deck. whether it's hot or uncomfortable at night, it's still much better than the interior of the ship. >> jay, i was struck when my colleague carl quintanilla spoke to the coast guard running aside the ship. said, do you know what conditions are like inside. he said, no, we haven't been invited on board. you have a private company that totally contained the situation for a number of days of is there a role at some point for those

people on board to say we'd like to get off and like the help of somebody else to get off ship, be it carnival cruise lines or military or is the captain of that ship always in charge. if a private company says the passengers stay with you, however longette takes you to get to port, that's the way it is, because that's what the captain says. >> yeah, the captain is like the king of his country out at sea. the only person who could really challenge him would be an executive of the cruise line. i can tell you, to bring in other boats to get passengers off, it would present a serious risk of injury to do that. if you tried to ferry passengers from the "triumph" to vessels, you can have passengers falling overboard. >> i'm sure the military must be able to get people off a ship like that, the u.s. military. >> sure. i mean, the carnival could do it themselves. if the ship was on fire right now, they would be lowering life

boats. even lowering life boats is a risk. that's a last alternative. they are much more safe waiting it out until they get to port. >> can i ask potentially a very simple question. when passengers go port, they always get on these tenders. is there a reason they couldn't use the tender system to get people off the boat, albeit might take a longer period of time but i'm sure it would be better than staying on a boat where there is no toilets and electricity. >> yeah, i've been on the "triumph" when we tendered in grand cayman. there was at one point in the matter of 30 minutes, the seas went from fairly calm to pretty rough. we're only talking about waves that are one to two feet in height. even they be we had to wait and leave the passengers on the dock and wait for the seas to calm down. again, it's a safety issue. if you have a small ferry bobbing up and down, trying to transfer from one ship to

another ship, it's too dangerous. >> harder to imagine a scenario with where it's better to stay on the boat but we appreciate your time. >> a huge day for corporate news. more on the buffett buyouts of heinz and other consumer food names rise on the back of that news, could it be those other players are now potential takeover targets? and bernie madoff is fired up. he's reached out to cnbc's scott cohn from his prison cell. find out why and what he's angry about if you care. mine was earned in djibouti, africa, 2004. the battle of bataan, 1942. [ all ] fort benning, georgia, in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve the military, veterans, and their families

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praf shares of zillow surging as much as 20% off the highs of reported earns. the ceo, good to have you back. >> good morning. >> stock behaving pretty well here.

revenue, of course, pretty good. new users, average monthly unique users. walk us through the quarter. >> great quarter, revenue up year over year, record traffic, record marketplace, up 95% year over year. really a great quarter up and down. i think the big reason, zillow continues to benefit from mobile migration. in quarter more homes reviewed on zillow than desktop. we monetize incredibly well on mobile. that's a big part of the zillow story. >> starting in december for the first time more than half the visits came through mobile devices. engagements obviously. is it accelerating? >> zillow on a mobile device frankly is a better experience than zillow on the desktop, because you're remote, driving around a neighborhood. for us,monetization, someone more likely to contact

an agent. someone selling advertising to real estate agents we love this migration to smartphone. >> as we watch the ball passed between rentals and sales, i wonder if rentals are soft in terms of comparison to purchase? >> well, well, rentals is a huge part, two purchases, acquisitions in the rental space, one company called hot paths, another a software company for management in space. zillow is one of the largest rent sites, a big part of our growth story going forward. >> can you co-exist? is this town big for the two of you? >> i think. zillow is number one in the category but we only have 2% of what real estates spend on advertising. they spend 98% of their ad budgets elsewhere. both companies are growing quickly but really this is a huge market. >> spencer, you guys, entrepreneurs look more broadly than operating at one time. i know the original founders of the company described zillow as

a media company because of the way in which it generates its revenue. do you look around the rest of the economy and think, actually, i might be able to zillow that industry, that industry is right for the same sort of business model? >> certainly we try to do it in these adjacent categories related to the home. there are still pockets even related to the home where there is a lack of information transparency. that's what zillow is all about, empowering people with access to information. last week we launch a product called zillow digs in the home improvement, for the first time we bought price transparency to remodeling, zillow digs, ipad or desktop you can see what a kitchen remodel would cost, bathroom remodel would cost. there actually are pockets of industry where the internet hasn't yet empowered people with access to information and we intend to change that certainly in everything around the home. >> interesting. >> all right. spencer, appreciate that very much. congratulations on the quarter. >> thank you. >> talking housing tips.

coming up next, rick santelli diving into interest rates. will they move more on the economy, central banks or market logistics. the morning after mark zuckerberg's big fundraiser for chris christie. details ahead. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

welcome to "squawk on the street" and thursday's rendition of "the santelli exchange." i was talking to so many brokers and accounting executives and traders regarding interest rates. today we had a great interview with simon and bob lutz. think about some of the things bob lutz said today. one of the things that stuck out in my mind when there were questions about the weakness in europe, it isn't only gm, it's cokeca-cola and caterpillar, he said we're getting more interest rate because we're buying securities in europe. the interest boys told me they don't know which way is up. you could call it a worry but i don't think so, that's too conventional. is it a wall of uncertainty, maybe, but i think it's a wall of weakness. now look at the list that traders are talking about, that trade interest rates. they're saying the one area is central banks, they play a prominent role, think how many

billions a month our central bank is pushing to buy treasury securities. also think about the economy in general and not just in the u.s., but of course around the globe, and last but not least, logistics. why are logistics important? because so many investors and central banks outside of the ones of country of origin have so many positions in each other's government securities markets. so how can you possibly trade these things? you know, some of the worries i'm hearing today are of course the gdp in europe, the gdp in japan, they're weakening. well, that's unemployment, look at greece. they say greece, unemployment's up to 27% but 15 to 24-year-olds, button down on this one, close to 62%. when we think about japan, we think about g-20, they're denying there's anything going on that we need to worry about with regard to the japanese

currency. but just look at the speeches of abe before he was elected. i don't know how you can reconcile those two dangling participles. think about the italian election, the turbine text, big article in the "wall street journal," think spain, one word on spain, bankia, that should be enough said. but the central banks can they really stop it? logistic, all of the positions, the conventional wisdom that interest rates are going up, well if this giant group of aggregate positions starts to reach a tipping point, what's the fed going to do in this country, for example? buy 160 billion, buy 200 billion? the economy being weaker globally is the old reason why traders bought treasury securities. goldman in a report says hey, maybe there are 200, 300 basis points underrised. how do you reconcile that? in this day and ainge being a trader may be considered complex to others but the traders think it's almost downright

impossible! carl, back to you. >> a lot of people feel that sentiment, thanks, rick, see you soon. still ahead a reworked deal with anheuser-busch, imbev, shares up almost 35%. rob sands in a first on cnbc interview coming up. what's next? he's going to apply testosterone to his underarm. axiron, the only underarm treatment for low t, can restore testosterone levels back to normal in most men. axiron is not for use in women or anyone younger than 18.

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the dow is trying to get out of the the red. what is coming up tonight? >> the hottest ipo thz year, gas prices near records so we're going to ask the former bank of america vice chairman why gas prices are higher and in honor of valentine's day the trades, the traders are actively courting. >> the trades, the traders are actively courting? >> they are in love with these stocks but not quite the right time to go after them. when is going to be the right time to actually make the play so to speak. >> all right, we'll see you tonight, melissa. see you guys in a little bit. here is what you missed earlier on if you're just joining us this morning. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> it is officially done after months and months of waiting, we are here, and the big news, u.s. airways group and american air

to merge. sources telling cnbc that berkshire hathaway and 3g are prepared to buy heinz for $28 billion. >> this fits what he does beautifully, a steady no technology to speak of, grind it out. >> brand known around the world. >> it's good for investors, good for the u.s. airways shareholders and good for the creditor of amr, and good news for all of our employees, creates a stronger airline, allows us to do more in compensation and for all those reasons i think it makes a lot of sense. >> we're partners with 3g and we'll both the same amount of equity, we'll own a proffered stock in addition. it's my kind of deal and my kind of partier in. >> they're buying this and they're going to keep it. they're not going to take it public. it's not a private equity model. they're going to keep it and the likelihood is that this new partnership --

>> when i was at goldman sachs the first stock i bought for my hedge fund because i knew there would never be a chinese or japanese bottle of ketchup on the table anywhere. this is one of the most iconic brands. good thursday morning. what a day for news. we're live here at post nine at the new york stock exchange. it has been a busy morning. berkshire hathaway and 3g capital buying heinz for more than $23 billion. that deal has been unanimously approved by the heinz board and shareholder also receive $72.50 a share in cash for each share of heinz, spiking on the news today of course. heinz and 3g capital are hosting a joint news conference in pittsburgh scheduled as you can see to start any minute. when that begins we'll take it live. another big mover constellation brands and anheuser-busch, a

complete divestiture of gru grupo modelo. do we want to head to pittsburgh? heinz holding a news conference on this deal. >> jay heinz introduced his first product in 1869 and the simple premise that served us so well for all of the years has led to today's exciting announcement about a new partnership and platform for growing our great company. heinz shareholders will receive $72.50 in cash per share, that's a 19% premium to our all-time high share price and a 30% premium to our one-year average share price. it also represents almost 14 times ebitda and over a 34% supreme your to our ten-year ebitda average. given this value following a comprehensive review our board unanimously approved this transaction. the deal will deliver a substantial return for shareholders and ensure our

commitment to pittsburgh. upon closing in this unprecedented transaction, heinz will become a private enterprise, at $28 billion this will be the largest acquisition of any company in the history of the food business. our shareholders are being well rewarded as this transaction is occurring from a position of strength, after 30 consecutive quarters of organic top line growth and all-time record market cap. this is a great compliment to all who have contributed to the success of this company. more than a decade ago we began a journey of transforming heinz from a u.s.-centric food company into a global powerhouse with a more focused portfolio of strong brands in advantaged categories. with two-thirds of our sales now generated outside of the united states and 25% of our sales in emerging markets, the company has built significant global reach and capabilities. today's announcement confirms the value of what we have achieved, and the strength of the platform we have built for

continued superior performance. this new chapter will be filled with many opportunities for heinz to further expand our global reach -- >> william johnson of heinz talking about taking the brand. david faber, once a sleepy domestic brand which is hard to remember, given now its exposure and leverage to emerging markets around the world. >> exactly a great point to make, almost at 30% of revenues coming from emerging markets that's something mr. johnson of course has done over the last few years, focusing on the mega brands as you say, carl. the stock at one of the highest multiples in the group, it is a 19% premium, that is berkshire and 3g are paying to its all-time high so one can imagine when he first heard from mr. buffett and mr. paolo from 3g with the joint potential bid mr. johnson made, he said okay, maybe now is the time to consider selling for shareholders, done a lot of work here and if we can get a 20% premium to the all-time high

trading at the multiple we, getting 14 times ebitda maybe we should take it. clearly he did and this deal i heard the original approach made maybe in mid-december a so-called soft approach, they didn't talk price, they had a nice cordial dinner and then they get a deal done less than two months later. >> it's interesting, going to bring some cultural change to pittsburgh. he talks about the commitment to the city but now you're dealing with some brazilians that will get to know that city pretty well. someone calculated $491 million for each of the 57 varieties, if you want to divide it up that way. let's get insight, joining us on the cnbc newsline, jeff matthews author of "warren buffett's successor, who it is and why it matters." jeff good morning to you. >> good morning, nice to be here. >> let's talk about the brazil effect. i wonder if this marks a change of any, in any way to buffett's

approach to m&a, to his operational playbook. >> well you know he's always been flexible. he likes to get what he wants at the end of the day. he has done deals with acadia like this, although not on this scale, so i think what it reflects is how highly he thinks of the 3g guys and how much they bring to the table here. there's a little bit unusual, it's a company that probably wouldn't run best by itself as it is. it's very international business, and very undermanaged i think in the big sense. >> when was the last time you remember him buying something where the shares were trading at or near an all-time, a 52-week high at least? >> well you know, he paid for burlington northern and the berkshire model is different than it was 30 years ago. this is not your father's berkshire. he used to buy companies for 50 cents on the dollar, buy pieces of them in the stock market. now he's buying controlling

interests, and to do that you have to pay top dollar, so his hope is that 50 years from now that dollar that he's paid is worth a lot more and with a franchise like heinz and with guys like the 3g guys there, they've done a terrific job with burger king already, i think he has a lot of confidence that that will happen. >> is there a string we can use to eye his most recent purchases thematically, i'm thinking about rails, food, newspapers, i mean they're all u.s.-based but a lot of them have exposure to international markets, some have tried to argue they're a play on a long-term view regarding inflation. what do you make of those? >> well, remember, maybe five, six, seven, eight years ago he really looked like he wanted to do something internationally. he traveled to europe. he bought these really -- >> cars. >> there was a lot of expectation he was going to focus internationally and since

then he's been focused domestically. i think what it really reflects is the big hole in berkshire's portfolio has always been a consumer package company, like a heinz, and you know, every annual meeting he talks about how great mars is. he did the wrigley's deal with mars, and he's always wanted to own something like a heinz, a really solid consumer franchise like this, and it's the one thing berkshire doesn't have, ironically. it's got seas candy but it's tiny, an equity position in coke but this plugs a huge hole he's always wanted to have. makes sense to me. >> interesting point. finally he loves to tantalize us with talk of how much cash he has left. this morning on "squawk box" he's got somewhere in the neighborhood of $12 billion, $14 aboutle to plbillion to play wi and still keep the amount he likes in the back.

where would the next acquisition come from, what is your guess? >> this was my guess, not heinz itself but i thought he was focused on this area. after this, i don't know, it could be anything, another utility acquisition, it could be something possibly in europe, there's a lot of merchandise over there right now and the banks in europe are just starting to cough stuff up. he's very opportunistic and it's got to be at the right price, so we'll see. >> yeah, i mean we've asked the question a few times and those -- hardly anyone wants to take a guess because he is so mer k mermurial mercurial. jeff thanks so much. >> any time, thank you for asking me here. the other big deal of the day the boards of amr and u.s. airways aproving a merger of the two airlines, making the bigsest airline in the world at about $11 million. phil below is at dfw with the

latest. >> reporter: you showed the press conference going on in pittsburgh. let me show you a press conference at the dallas-ft. worth airport, doug parker, the ceo of u.s. airways and tom horton, who is the ceo of american airlines, he will be chairman of the new company, they're introducing the company at a press conference here, going over the details and what are those details, carl, you mentioned it's an $11 billion all stock transition -- transaction, and what you're looking at is american creditors will get 72% of the new american/u.s. airways shareholders get 28% of the new americ american. this caps the pend of an amazing period of consolidation over the last eight years in the airline industry. doug parker started it all way back in 2005, when you talk about the merger of america west and u.s. airways and this new airline, it will be the largest in the world with 4.7 million available seat miles. we talked to doug parker earlier

today on "squawk box" and we asked him if whether or not he thinks the consolidation play is over. here's what he had to say. >> it was 2005, there were 11 airlines, at least 1% of the industry. now we're down to three large carriers. i don't think there's a lot of consolidation. we have a nicely rational but intensely competitive airline industry which is going to be good for consumers and good for investors. >> certainly has been good for investors in the last year. take a look at shares of lcc, that's u.s. airways, compare them with the airline index which hasn't been too shabby itself, no comparison at all. we should point out carl, a number of analysts have come out today and already said they like the airline sector despite the idea that the airline consolidation play has essentially played out. carl? >> it's going to be interesting to see what they trade on next, phil lebeau joining ounce the amr deal. straight ahead bernie madoff wrote cnbc a letter from his jail cell. and the c oh, of

constellation brands is here first on cnbc, we'll talk about the revitzed agreement between anheuser and grupo modelo that has sent the stock soaring. first rick will talk about bonds. >> carl, we'll talk about muni, munis, munis. are munis in your future? that miraculous budget that seemed to balance in california, we'll talk about build america bonds with senior analyst municipal market advisers and who is it? matt fabian. you'll want to see this, about half past the hour. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage

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today's all about the industrials trading higher. generac trading sharply lower despite strong earnings this morning, in the wake of the snowstorm not too long ago. josh lipton at the market flash desk with more. >> hey there, carl, the generac is getting crushed, beat on the bottom line and the top line and bullish guidance for this year as well so what is the problem? analysts telling me they see no red flag in the report, nothing alarming. instead they argue this is just profit-taking after a hard run, generac benefiting from news of hurricane sandy, the recent snowstorm in the northeast, a perfect confluence they say of events for this company. the stock surging some 65% in just the past six months. today though down some 7% here. carl, back to you. >> josh, thanks for that.

let's get our capital markets up. gary kaminsky is going to talk fixed income. >> carl, good morning. every day we hear strategists come on to the network and talk about the great rotation out of bonds, into stocks and i want to have somebody join me today who has been doing this, rich saperstein, run about $10 million, running institutions for 30 years, we got together in the early part of january, rich and you told me i'm selling bonds to buy stocks. we hear about it every day. why are you doing this and logistically operationally how are you doing this for your clients? >> economic conditions have vastly improved since the lows of the recession, yet interest rates haven't moved much so for clients and treasury partners we've been reallocating assets out of bonds and into stocks. >> the clients are willing to accept the higher volatility with stocks given the way the world is right now and the fixed income of bonds? >> let's talk about volatility. for the last 50 years the average where the ten-year treasury has been yielding 350

basis points above the s&p. today the s&p is yeeling 40, 50 basis oints over the ten-year treasury. we talk about the risk of stocks and bonds we have to calculate it to relative averages. >> we bring up this chart, this is what you sent your clients and it was startling. lot of people hear this every day but don't see the numbers. explain to viewers what you are telling people when they look at this price interest rate sensitivity analysis. >> okay, look, there's a real mismatch between where the valuations are between equities and bond yields, and in the last five years, 1.1 trillion has moved into bond mutual funds and 400 billion has moved out of equity mutual funds. >> right. >> now we're at a ten-year treasury where if rates move back to historical average, 100 basis points higher on the ten-year, you're going to have a 9% decrease in bond yields. if rates move up 200 basis

points you're going to have an 18% decrease in bond yields. >> guys, bring back that chart if possible. is this the interpretation that if we are going to see a 2% move in the 30-year, somebody who is buying a 30-year bond right now could potentially lose 40% of their principle? >> correct. moreover than that the yield on the 30-year is not enough to protect against the decline in bond value so bonds are an extremely risky investment right now given where the economy is and potential rise in rates. >> you're doing the rotation for your clients. people are happy, they're accepting this. are they thinking about the next three years, five years or the next ten years as they're moving money out of bonds and into stocks? >> we have a long-term cycle ahead of us with economic improvement. we're going to see rising interest rates and improving stock values. we'll have higher multiples and that's where client assets should be allocated. >> rich thanks for joining us. guys i want to come over here to post eight, rick was talking

about moving out of bonds and into stocks, look at century link, this is a stock that a lot of individuals bought for the dividend payment. this stock is down 20%, traded about 28 million shares. this is a name, guys, if you had screened on google or yahoo! and tried to find high dividend payers, this is what happens when you just buy a high-paying dividend stock and you don't know the fundamentals behind it when you screen for high yield. warning to all, not all dividends are going to be stable and growing. back to you, carl. >> yeah, there's no s&p stock doing worse today. thanks, gary. >> you got it. when we come back the ceo of constellation brands joins us live, and later on, bernie madoff writing to cnbc from his jail cell and he's not happy, we're told. we'll find out what has him so fired up when we talk to scott cohn after a break. all stations come over to mission a for a final go.

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shares of constellation brands jumping after the company announced revised terms for its deal with anheuser busch imbev. rob sands, constellation brands president and ceo joins faber to are a first on cnbc interview. >> thanks, carl. constellation buying crown, it's paying $2.9 billion for the brewery in mexico as well as perpetual rights for the corona and modelo brands in the u.s., total consideration about $4.34 billion. will it be enough to satisfy regulators? rob sands, konsation brands' ceo joins us on the phone. i was almost expected to see the doj gives its blessing to the deal to acquire modelo. why didn't we see a doj ascension if you will as part of this overall deal? >> yeah, david, unfortunately

i'm not in a position to comment specifically on the doj because we are in litigation with them, but suffice it to say that we believe that this transaction addresses all the issues that were raised in the doj complaint which initiated the action against abi. >> why do you believe that to be the case? >> well, this transaction establishes crown and constellation as a completely inpei independent number three player and business in the united states, basically the complete supply chain for production of the products as well as the entire distribution infrastructure. so abi will have no participation whatsoever in any part of the u.s. profit stream, and constellation and our crown

beer division will be entirely independent as it relates to production and distribution, marketing, and pricing of product in the united states. so it entirely takes abi out of the picture. >> right, you've got it all now. you buy the manufacturing in addition to what was part of the other deal, distributing, marketing. you know, though, rob, there is some belief not a large one given what's going on in your stock price today nonetheless the doj's stated views previously on constellation's let's call it lack of competitive incentives to compete on price will still mean it moves ahead with blocking the deal. why do you disagree? >> well, primarily because we'll own the entire profit stream including the production element of it, and the distribution piece of it. so we would be as incentivized

as any competitor to drive that business, and when you think about it, we're making a very large investment in one of the world's best breweries, and so we're obviously going to be highly, highly incentivized to drive business and volume through that brewery. >> so in your opinion this will change the competitive incentives towards let's call it this worry about coordinated pricing? >> yeah, well obviously we don't buy into any of the coordinated pricing element of this but yeah under our old agreement, under our old arrangements, the jv we had with modelo, that jv terminated or had the potential to terminate in 2016, so there clearly was different incentives

under that arrangement. under this arrangement, which is entirely perpetual and ta tantamount to constellation owning the brand in the united states, our incentive is to invest behind the business and build the brand and grow the business, and i would also add the crown team has been notwithstanding the previous incentives a very, very strong competitor and we anticipate that the business is going to be very strong in the future. >> what do you know about brewing beer? >> well, we've owned a brewery in the past, and we own almost 40 wineries and distillaries around the world, some of which are some of the biggest in the world, and a lot of our

operations people come from either a brewing or a distilling or a wine-making background, and probably even more importantly, the brewery that we're acquiring in pi edras negras comes with a complete and highly skilled team of people that have very successfully run that brewery in the past. >> sure. >> on a completely self-sufficient basis, so we don't anticipate any issues whatsoever. >> all right. levering up the company, comfortable almost six times leverage? >> we're only levering up to just over five times david, so around the very low fives, and you know, we've levered up to the low fives a number of times. typically when we do make a significant acquisition, we lever up to the low fives and because the beverage alcohol business is so cash generative,

we delever very quickly so we would anticipate delevering back into our target range of between three and four within two to three years. >> rob, very much appreciate you joining us on an important day, your stock up 30%, rob sands, ceo of constellation brands. >> thanks a lot, david. >> you're welcome, thank you. when we come back, bernie madoff e-mailing us from his jail cell. what did very to say? that's after the break. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles.

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the european markets are closing now. >> let's see how our own trading session is affected by that close. lot of red and man some of the numbers we got today not good. >> shocking, it's shocking what is happening to growth in europe. overall in the fourth quarter the recession got worse for the eurozone, annualized decline of 2.3%. the european central bank is forecasting looking forward this year there will be zero growth for the eurozone, that is very important moving forward if you're in world markets. you can see the fallout on the euro, people talking about an interest rate cut that may not be the point here at this stage. euro/yen has risen 23%. let me break down by country for you exactly what happened in the fourth quarter. germany worse than expected,

equipment fell, exports fell according to jpmorgan. france lightly better than expected, households and government spent more. brussels is going to give all the governments more time to balance their budgets, looking ahead probably germany will bounce back the quickest. lot of focus now inevitably is on the euro, and the way in which the euro has moved since mario draghi said that he would do everything to save the eurozone. the gain as you can see since july of last year is almost 10%. morgan stanley, credit suisse say for a 10% move in the euro, economic output will contract by 0.7%, and corporate profits by 4%. so presumably some of that still has to come as we look forward. as you'll be aware earnings in europe have disappointed to a greater extent than earnings here in the united states. that's one reason why if you look at the european markets, they have fallen during the course of the year. the dow jones continues to rise, up almost 7%, but monument

securities makes this very important point, world markets are assuming that global economy also rebound this year. if there is no evidence of a rebound, perhaps by the spring, then potentially these markets could fall and the ecb is now saying there will be no rebound in the eurozone and that could be very important for equities here as well as the rest of the world. back to you, carl. >> despite what our own economy may be doing at that time, absolutely simon, thanks. let's get a check on norg and commodities, jackie deangelis? >> we're watching oil prices mostly mixed for a lot of the morning and a couple of factors to consider, first the news the iaea was failing to reach a deal with iran regarding investigating its nuclear program, that supportive of crude prices. brent prices earlier in the session near a three-day high but resistance coming out of europe, just what simon talked about, growth in the eurozone and seeing shrinkage in the biggest economies there.

if you look at the ftse charts you can see the decline together. also nat gas down big today after the energy department's weekly look at natural gas inventories, the number less of a draw than expected and i want to talk a quick look at the metals complex, watching gold prices they are staying below 1650, failing to move a lot today. the dollar getting a bid, not helping gold but it's silver down nearly 1%, the biggest loser. back over to you. >> jackie, thanks so much. pisani is back from florida. >> 88 degrees for literally i mean weeks on end, some of the best weather i've seen in years in florida. here we are back in new york. at least it's not snowing on us, not yet today. look at the sector, fairly narrow range in the dow, 65 to 70 points. normally the dow moves 125-point range top to bottom. either side of positive or negative, consumer staples

upside, industrials, technology on the downside. heinz has had enormous volume throughout the day, $72.50 a share for heinz, so you can imagine the volume here, put up heinz, hard to imagine that difference. there's your 20% premium. lot of people asking about what other companies might be involved in takeouts in the future at m&a. it's hard to say. all of these are up and these are new highs. general mills, smucker, b&g, historic highs. campbell's a four-year high. i think the problem is that a lot of these are bound up in trusts. campbell for example is practically private, heavily involved, the family is heavily involved in it so it would be hard to imagine there would be takeout of that particular group. elsewhere people asking whether there will be any competitors, i don't know. private equity hard to believe they'd be involved in a deal or counter a deal like this. other companies interested in heinz in the past, there's burger king. you notice what happened here, i think very importantly 3g, a lot

of people messaged 3g was successful in getting costs down for burger king. they own 70% of burger king and have been successful getting costs down. burger king went public again only last year. put up some of the companies that might be interested in heinz. they've been floating around, campbell, unilever, kraft, maybe, but i find it hard to be other companies interested in a bid that was this big. still a little bit out. notice that the airlines index is sitting at a five-year high. the good news on this deal announced with usa and amr is costs are going down, the companies are more profitable overall, capacity is shrinking. these companies are great, but the problem is when you're sitting at a five-year high it's hard to argue that the company should be priced higher unless you think they'll have pricing power and that's been difficult to attain so maybe that's why today as we've announced what is probably the final big merger in airlines, look here. all of the big airlines are trading to the downside. so i think it's going to be a little bit tough to argue at

this point unless you can prove they're going to get higher prices very quickly for their air fares don't think it's going to work. >> something isn't going to happen. thanks, bob. let's get to srick santelli in chicago. >> i'd like to welcome my guest matt fabian from moounie market advisers. >> hey, rick. >> maybe you can give our viewers and listeners a quick lesson on how the federal government fits into the build america bond program and then tell us how it may be facing a two front war, one from the sequester and the other from the potential hunt for revenues. >> well, you know, for sure, build america bonds were launched as part of the president's stimulus in 2009 so about $180 billion of taxable municipal bonds were sold. they are taxable but the issuer receives a subsidy payment from the federal government as part of the interest rate so that program ended at the end of

2010. there have been mull tippal tempts mostly by democrats who revived the program, as far as we can tell mostly on political grounds, they faced opposition from republicans, again, mostly on political grounds. it continues to come up with the sequester looming, those subsidy payments to the issuers would be cut under the main scenario for the sequester. it has really infuriated issuers, so any attempt to create more broad-based support for grassroots support for a relaunch pretty much compromised at this point so it's unlikely that buildamerica bonds will be coming back soon. >> it sounds like we have some technical issue, we have to wrap but we will bring you back and we apologize. back to you in englewood cliffs. >> thanks a lot, rick. part of live television. convicted ponzi schemer bernie madoff writing a note to our scott cohn from his jail cell, scott you've been tweeting about this in the last few minutes. what did he have to say?

>> ea >> bernie -- i have bernie on the brain. half a dozen e-mails bernie madoff dashed off from prison all of them on the record and it is very clear that bernie madoff is angry. why, this follows our exclusive interview with irving pickard, the trustee rounding off madoff's assets for investors. pickard told us madoff has been no help, $5 billion which the trust ye is preparing to put off to investors. no help, that set bernie madoff off in a big way. i've been in touch with madoff for quite a while now much of it off the record at his insistence but picard's comments unleashed a tirade. he's telling me he now wishes he had not pleaded guilty to the epic ponzi scheme as he did in 2009 because he says picard is distorting the truth. this is a man that keeps making

statements that have no facts to back them up. i wish i went to trial and he would have been required to provide the evidence he claims he has. as you can see, i'm frustrated. he goes on, as remorseful as i am for the pain and suffering i have shamefully caused, i take some comfort in the fact that, with my assistance, all of my customers will recover their original investment principal. madeoff is proud of the role he claims he played in the biggest chunks of money recovered, $7.2 billion from mega investor jeffrey pickour, who died shortly after the fraud came to life. his widow turned over the money. when i spoke to picower prior to his death action madeoff writes when i spoke to picower prior to his death i made it very clear i would testify about the role of him and his accountants, attorney and assistant, to name a few.

madoff says of picower, of picard, "i can certainly understand his reasons for not acknowledging my role because how could he justify his fees otherwise?" picard has billed more than $600 million for his work. there is a lot more in these e-mails madoff on his sons, madoff on the banks, we're going through all of it, more of this as the day goes on and on cnbc.com. >> scott i hope he understands how perverse it sounds to take any credit for helping people get some of their money back. >> you know what, i think he does understand that. i think that though he's still as picard told us this week that madoff likes to feel like he's in control of the situation and that's what he's doing even as he serves the rest of his life in prison. he always prefaces these things with this bit about remorse, and then goes on to claim credit for what a good person he has been. of course that sort of ignores the fact he pulled off this epic ponzi scheme for many years.

>> scott thanks for bringing that to us first, scott cohn at hq. when we come back, which political heavyweights made an appearance at mark zuckerberg's party last night. and the ceo of million tie million-dollar startup next door will tell us how he's succeeding where others have failed and how he's bringing your cul-de-sac into the 21st century. "squawk on the street" is back in a minute. in america today we're running out of a vital resource we need

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more "likes." more tweets. so, beginning today, my son brock and his whole team will be our new senior social media strategists. any questions? since we make radiator valves wouldn't it be better if we just let fedex help us to expand to new markets? hmm gotta admit that's better than a few "likes." i don't have the door code. who's that? he won a contest online to be ceo for the day. how am i supposed to run a business here without an office?! [ male announcer ] fast, reliable deliveries worldwide. fedex. [ male announcer ] fast, reliable deliveries worldwide. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.

coming up, bulls versus bears, can the recent pick up in deal-making trump the cracks corm of forming in europe. bet on buffett? should you buy consumer stocks even as they sit near record highs? whitney tealson is back with the best plays. and john taylor tells ulsz the best place for your money right now. see you in about 15 minutes or so. >> welcome back, scott, good to have you back in the chair. an unusual fund-raiser in the heart of silicon valley last night and inside look at the guest list. julia boorstin has the story from out west. >> hello to you, carl. facebook ceo mark zuckerberg hosted a fund-raiser for republican governor chris christie last night at his home in palo alto. it drew several dozen guests a i ton of media attention and about

40 protesters. christie arrived in a white suv, that's him in there. he snuck in while former secretary of state condoleezza rice entered through the front. event organizers did not release a guest list saying the event was targeted at zuckerberg and priscilla's social network of friends. there were a number of facebook executives present, some entrepreneurs and venture capitalists from the palo alto area. the event drew about 40 protesters chanting criticismses achristie's policies on women's health funding in particular. many of the signs they were carrying read zuck and chris, hands off planned parenthood. credo action organized some of the protesters, they said christie is funding the war on women. facebook has released a statement saying that mark and priscilla worked closely with governor christie on education reform in the newark school system, admire his leadership on education reform and other

issues and look forward to continuing their important work together on behalf of newark's schoolchildren. the donations for the event last night capped at $3,800 will go toward christie's gubernatorial campaign for the election in november but the big question, carl, is how much last night's event will help fund-raising for christie's possible presidential run in 2016. back over to you. >> you know, julia, we got cheryl sandberg writing a book out soon. ap has a note randy zuckerberg, the brother will write a memoir "dot-complicated" in the near future. we'll learn more about the company in the next few months. >> zuckerberg and sandberg are very public people now, whether they like it or not, and that's something that sandberg has really embraced with her book, taking advantage of her high profile to address issue of women in the workplace and zuckerberg is doing the same thing, wants to draw attention to the education causes and introduce his friends to christie and raise his profile. >> interesting. we'll keep an eye on that,

julia, thanks so much, julia boorstin out west. when we come back the startup that's turning your neighbors into a multimillion-dollar business. next door, the social network for neighborhoods backed by early investor and facebook and linkedin raised more than $40 million so far. ceo will join us after the break with some of his secrets to success. at his current pace, bob will retire when he's 153, which would be fine if bob were a vampire. but he's not. ♪ he's an architect with two kids and a mortgage. luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense. from td ameritrade. it's just common sense. (music throughout)

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♪ think of me babe whenever ♪ some sweet talkin' girl comes along ♪ in the spirit of valentine's day, one startup is trying to bring local communities closer together. next door is the social network for your neighborhood basically, launched in october 2011, used by over 8,000 nabeighborhoods i all 50 states. this updated and announced $21 million in funding led by some of the most prominent venture capital firms in silicon valley. nirov good to see you. >> thank you for having me. >> interesting concept the notion that maybes don't talk to each other, all on social media, makes some sense but what is next door do that facebook or some other social media site is not already doing? >> next door is a very unique social network because it's not about connecting to your friends. it's about connecting to your neighbors. as you mentioned we seem to have lost touch with our neighbors. the specific data point is in

america almost a third of americans don't know a single neighbor by name. there are so many ways our neighbors can help us and technology can bring back a sense of community to the neighborhood. that's what next door is all about. >> we mentioned the funding, congratulations on that by the way and some of the investors here besos expeditions, google ventures, alan and company and a man on our air not too long ago, david z. who has a history of his own. here is a history of what he told us the other day. >> i'm a fan of a big company called next door, taking the facebook experience and making it private and secure and bringing back person-to-person interaction and trust in neighborhoods so the benefit of the neighborhood you used to have last over the years we're using that technology to bring that back in the trust of individuals. >> nirav, talking about finding a good babysitter, making sure criminals aren't lurking throughout the neighborhood, is that the extent, what is the social purpose? >> it's all about connecting and communicating with the people

around you to solve real problems and talk about the things that matter and it can be straightforward things like finding a trusting babysitter or dentist, more personal, finding a lost dog or critical things, sharing information about a series of break-ins. we've seen neighborhoods come together in over 8,000 neighborhoods and use technology to create stronger and happier places to live. >> you've seen examples where neighbors have, a criminal has been apprehended as a result of this. >> yes, many, many, many times neighbors have used next door to warn each other about suspicious activity and as a result either prevent or at times apprehend criminals that are trying to cause mischief in their neighborhoods. >> are we talking about in terms of monetization, fees, member fees, local advertising? >> the site is completely free to members and will always be free. we are optimistic about the business potential of the service, because local advertising alone is a $100 billion market but all of the

ways that people advertise locally today seem to be on the decline, yellow pages, local television, local newspapers. we believe that will come online and when it does nextdoor will be a great place for that to take place. >> with he mentioned 8,000 neighborhoods. you've raised $40 million in basically ten months or so. is this going to always be a domestic business or does this work in dublin, does this work in moscow? >> well in some ways nextdoor could be more relevant in foreign countries because in foreign countries they don't have a culture based around going across town to eat somewhere or to your job and so in foreign countries your neighborhood is even more important in some cases. we will expand internationally in 2013, one of the big reasons we raised this financing. >> maybe you're already making money but walk me through the narrative of profitability and is this eventually going to wind up a public company? >> well like most social networks, facebook, linkedin, for example, we are now focused on adoption, 100%.

we want to bring the magic of the nextdoor experience to neighborhoods everywhere. once we get some critical mass on the platform we'll turn our focus to monetization. we'd like to be a standalone public company in the future. >> when that happens i hope you'll come back if not before there, nirav, thanks for your time. we keep hearing about this local model more and more. thanks so much. >> thank you for having me, carl. >> nirat toliav joining from us nextdoor. details between one supermarket chain's struggling stock price, after a break. the patient, presented with

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